The act was largely symbolic since Citigroup already announced last year that it would close the unit by October and it hasn't been trying to get new business in recent months. Still, the move by Japan's Financial Services Agency deals another blow to Citigroup's already-tainted image. Last year, the New York-based bank was ordered by the agency to shut down its private-banking division amid accusations of lax controls against money laundering and other violations.

In a separate investigation last year, the FSA found that Cititrust & Banking Corp. had committed a number of violations, including helping clients manipulate accounting records through improper real-estate deals and mismanaging customers' personal data. The agency also accused the bank of selling mutual funds despite being ineligible to do so and of lying to inspectors about the matter. FSA officials said the violations occurred despite a warning issued to Cititrust in 2001.

As a result, Cititrust must suspend new operations starting May 2, although the order will be lifted if it meets certain conditions, including singling out employees responsible for the violations and submitting a plan for tightening controls by May 27. The FSA also said Citibank will be allowed to dissolve the business only if it complies with FSA orders.

In response, Cititrust issued a statement Friday saying that it accepts the findings and will shut down its business according to the FSA's conditions. It added, however, that the bank has no intention of adding new business because it is already winding down its current operations and moving customers to other parts of the bank.

"Cititrust continues to pursue a smooth transition of its customer accounts and will fully comply with the FSA's order in managing and completing that process," the statement said.

Citigroup in October 2004 said it would shut down the trust-bank business as part of an overhaul of its Japan operations following the scandal, admitting that the unit had compliance and governance problems.

At that point, Japanese government regulators already had begun their separate investigation of the trust bank and decided to continue, despite the planned shuttering of the business. An FSA official Friday said the latest punishment won't affect Citigroup's business in this country.